Quiz | Updated January 2015

Are You Saving Enough for Retirement? - Quiz

Even before the onset of the worst financial crisis since the Great Depression, many people wondered whether they were saving enough for retirement. Frankly, many weren't. Now, post-meltdown, the question remains: Am I saving enough? Take our quiz to see if you are on track for a comfortable retirement and if not, how you can improve your chances.

Quiz

Are You Saving Enough for Retirement? - Quiz

Question 1 of 10

What percentage of gross salary, including employer contributions, should you strive to save to finance a comfortable retirement?

A. 5%
B. 10%
C. 15%
D. 20%

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Are You Saving Enough for Retirement? - Quiz

Question 1 of 10

What percentage of gross salary, including employer contributions, should you strive to save to finance a comfortable retirement?

You're right!C. 15% is correct.

Sorry, wrong! is incorrect.

The right answer is C. 15%.

The old rule of thumb was to save 10% of every dollar you earned for a rainy day. But with traditional pensions disappearing and workers becoming more responsible for financing their own retirement (including ever-increasing health-care costs), many financial experts recommend saving, including any employer matching contributions, at least 15% of your gross salary.

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Are You Saving Enough for Retirement? - Quiz

Question 2 of 10

If you are younger than 50, what is the maximum amount that you can you contribute to your 401(k) or similar employer-based retirement plan in 2015?

A. $8,000
B. $12,000
C. $18,000
D. $28,000

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Are You Saving Enough for Retirement? - Quiz

Question 2 of 10

If you are younger than 50, what is the maximum amount that you can you contribute to your 401(k) or similar employer-based retirement plan in 2015?

You're right!C. $18,000 is correct.

Sorry, wrong! is incorrect.

The right answer is C. $18,000.

Workers under age 50 can contribute up to $18,000 to their employer-provided retirement plans in 2015.

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Are You Saving Enough for Retirement? - Quiz

Question 3 of 10

Workers 50 and older are eligible to make "catch up" contributions to their workplace-based retirement plans. What's the maximum amount they can contribute to a 401(k) or similar plan in 2015?

A. $10,000
B. $12,000
C. $24,000
D. $32,000

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Are You Saving Enough for Retirement? - Quiz

Question 3 of 10

Workers 50 and older are eligible to make "catch up" contributions to their workplace-based retirement plans. What's the maximum amount they can contribute to a 401(k) or similar plan in 2015?

You're right!C. $24,000 is correct.

Sorry, wrong! is incorrect.

The right answer is C. $24,000.

Workers 50 and older can contribute up to $24,000 to their 401(k) or other employer-provided retirement plans. They can put in $18,000 in basic contributions and $6,000 in "catch up" contributions.

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Are You Saving Enough for Retirement? - Quiz

Question 4 of 10

Your employer offers a traditional 401(k) and a Roth 401(k). Can you contribute to both?

A. Yes
B. No

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Are You Saving Enough for Retirement? - Quiz

Question 4 of 10

Your employer offers a traditional 401(k) and a Roth 401(k). Can you contribute to both?

You're right!A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

You can contribute to a traditional or a Roth 401(k) or split your contributions between the two types of accounts, as long as your total contribution doesn't exceed the maximum for the year ($18,000 if you're younger than 50 and $24,000 if you are 50 or older). Although there's no upfront tax deduction for a Roth contribution, it will provide you with tax-free income in retirement. Unlike Roth IRAs, there are no income limits for contributing to Roth 401(k)s.

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Are You Saving Enough for Retirement? - Quiz

Question 5 of 10

Assuming you intend to retire at age 65, you should aim to accumulate savings equal to:

Quiz

Are You Saving Enough for Retirement? - Quiz

Assuming you intend to retire at age 65, you should aim to accumulate savings equal to:

You're right!C. 10 times your final annual salary is correct.

Sorry, wrong! is incorrect.

The right answer is C. 10 times your final annual salary.

You should strive to accumulate retirement savings equal to about ten times your final pay. Together with Social Security benefits, that should be enough to replace about 85% of your preretirement income. If you have other sources of income -- such as a traditional pension or a part-time job -- or if you plan to significantly reduce your spending in retirement, you can get by with saving less.

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Are You Saving Enough for Retirement? - Quiz

Question 6 of 10

If you are within ten years of retirement and your nest egg isn't sufficient, you should:

A. Review your asset allocation to make sure it's still appropriate.
B. Take advantage of extra catch-up contributions for workers 50 and older.
C. Consider working a few years longer.
D. All of the above

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Are You Saving Enough for Retirement? - Quiz

Question 6 of 10

If you are within ten years of retirement and your nest egg isn't sufficient, you should:

You're right!D. All of the above is correct.

Sorry, wrong! is incorrect.

The right answer is D. All of the above.

Although the stock market has rebounded from its March 2009 low, your retirement-account balance still may be lower than you had expected at this point in your career. To make up those losses, you will have to save more or work longer, or both. Working just a few extra years can have an enormous impact on your retirement income because you'll be boosting your savings, possibly increasing your Social Security benefits and reducing the amount of time you'll need to rely on your savings.

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Are You Saving Enough for Retirement? - Quiz

Question 7 of 10

If you postpone claiming Social Security benefits beyond your normal retirement age, how much will future benefits be increased for each year you delay until age 70?

A. 5%
B. 6%
C. 7%
D. 8%

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Are You Saving Enough for Retirement? - Quiz

Question 7 of 10

If you postpone claiming Social Security benefits beyond your normal retirement age, how much will future benefits be increased for each year you delay until age 70?

You're right!D. 8% is correct.

Sorry, wrong! is incorrect.

The right answer is D. 8%.

For those born in 1943 or later, your Social Security benefit is increased by 8% for each year you delay collecting benefits until age 70. The normal retirement age is 66 for those born between 1943 and 1954 and gradually increases to 67 for those born in 1960 and later. In addition to a bigger monthly benefit, the larger base amount of your Social Security check will result in larger cost-of-living adjustments in future years.

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Are You Saving Enough for Retirement? - Quiz

Question 8 of 10

You should wait until you retire to shift your investments to a more conservative asset allocation.

A. True
B. False

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Are You Saving Enough for Retirement? - Quiz

Question 8 of 10

You should wait until you retire to shift your investments to a more conservative asset allocation.

You're right!B. False is correct.

Sorry, wrong! is incorrect.

The right answer is B. False.

Leaving their investment mix alone until retirement proved to be a disastrous strategy for many workers who planned to retire in 2008 and 2009, when the stock market plunged more than 50%. You should gradually shift your investments to a more conservative asset mix before you retire. Determine how much of your savings to consider moving to safer investments five years before retirement. Also, set aside some of your money in non-retirement bank or brokerage accounts to diversify the taxability of your retirement income. Every penny withdrawn in retirement from traditional IRA or 401(k) is taxed at your ordinary income-tax rate. However, only the gains in your non-retirement accounts are taxed, at the capital-gains rate (the top rate is 20%), and investment losses can reduce your overall tax bill.

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Are You Saving Enough for Retirement? - Quiz

Question 9 of 10

Building a sizable nest egg is important because you might have to depend on those savings for a long time. For example, a 60-year-old couple has a 50% chance that one spouse will live until at least age:

A. 71
B. 81
C. 91
D. 101

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Are You Saving Enough for Retirement? - Quiz

Question 9 of 10

Building a sizable nest egg is important because you might have to depend on those savings for a long time. For example, a 60-year-old couple has a 50% chance that one spouse will live until at least age:

You're right!C. 91 is correct.

Sorry, wrong! is incorrect.

The right answer is C. 91.

Today’s increasing life expectancies mean you could easily spend two to three decades or more in retirement -- even longer than your working life. There’s a 50% chance that a 60-year old man will live to 84 or older and that a 60-year old woman will live to at least age 87, according to the Society of Actuaries. For a 60-year old couple, there’s a 50% chance that at least one person will make it to 91 or older. At an annual inflation rate of 3%, your purchasing power will be cut in half after about 20 years.

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Are You Saving Enough for Retirement? - Quiz

Question 10 of 10

Cutbacks in employer-provided retiree health-care benefits mean many retirees are paying for more of their medical care out of their retirement income and savings. To cover out-of-pocket medical costs throughout a 20-year retirement, not including long-term care, a 65-year-old couple would need:

A. $20,000
B. $120,000
C. $220,000
D. $320,000

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Are You Saving Enough for Retirement? - Quiz

Question 10 of 10

Cutbacks in employer-provided retiree health-care benefits mean many retirees are paying for more of their medical care out of their retirement income and savings. To cover out-of-pocket medical costs throughout a 20-year retirement, not including long-term care, a 65-year-old couple would need:

You're right!C. $220,000 is correct.

Sorry, wrong! is incorrect.

The right answer is C. $220,000.

According to Fidelity Investment’s annual Retiree Health Care Costs Estimates, a 65-year-old couple who retired in 2014 will need nearly a quarter of a million dollars to pay for medical expenses throughout retirement, including medical insurance premiums and out-of-pocket costs. Average health-care costs ranked second only to food, the largest expense in retirement. Retiree health-care costs have increased about 40% from the $160,000 estimate when Fidelity first conducted its annual survey in 2002.